Vote Conservative for more public investment. That sounds like an implausible campaign slogan which even William Hague at his most opportunistic would recoil from adopting. Yet it is a fair reflection of the pattern of the past seven years, judging by figures published this week by the Office for National Statistics. They show that last year net public spending after depreciation, instead of rising by over 45% as planned, actually fell by almost 32% to £2.6bn. At this level Labour was spending 50% less on public investment than the Conservatives in their last year in power and barely a quarter of what the Conservatives were spending in the three years to 1996. Direct comparisons with those earlier years are not completely fair because more is spent these days through the private finance initiative, which keeps it out of government accounts. Also, the Treasury rightly points out that these days departments can roll over unspent money into the following year's budget, thereby avoiding the year-end dash to spend money (often inefficiently) just to avoid handing it back to the exchequer. For all that, public spending on investment is at an embarrassingly low level.

This is crazy, not only politically, when Labour's heartlands are feeling so neglected, but also economically. Almost everyone agrees that serious money must be spent to improve Britain's infrastructure, both as an end in itself and to lay the foundation for longer-term economic growth. A separate set of figures this week shows that people are now spending more of their disposable incomes than they have since the disastrous late 1980s boom. The savings ratio - the proportion of income not spent - has fallen to only 3.8%, the lowest since 1988. The economy is out of kilter. We are spending recklessly on consumer goods (hence the £4bn deficit on the current account of the balance of payments in the first quarter), while chronically underspending on public investment.

What can be done? Gordon Brown has ambitious plans to double public capital spending over the three-year period covered by the comprehensive spending review. But since these plans do not include the current shortfall, the real level of spending will have to triple or quadruple to achieve these targets. And government departments have been so imbued with the "private sector good, public sector bad" ideology that they cannot readily adjust to the new Treasury policy (Viv Nicholson out of Lord Keynes) of Spend, Spend, Spend. Goodness knows what the great man of economics would make of the current scenario: a Labour government sitting on an £18bn budget surplus (even before counting the £22.5bn windfall from the auction of radio spectrum for the next generation of mobile phones). Yet the chancellor cannot spend it because any easing of his fiscal stance (the balance between spending, borrowing and revenue) would frighten the City and lead to even higher interest rates. And even where he authorises spending, the departments of state apparently cannot or will not spend it.

The final irony is that the time lag between authorising expenditure and completing it is so long that it is unlikely that the fruits of the huge rise in public spending in the pipeline will be noticed by the electorate in time to determine their voting intentions. This means that the likes of John Prescott should stop going on about grandiose £40bn plans for the future and take greater notice of underspending in their own backyards. For once, money genuinely is not the problem. Yet the opportunity to spend it is being frittered away.